Meloni Government Picks ECB’s Panetta as Bank of Italy Governor

(Bloomberg) -- Italian Prime Minister Giorgia Meloni’s government has selected European Central Bank Executive Board member Fabio Panetta to succeed Ignazio Visco as the next Bank of Italy governor.

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His nomination was decided at a cabinet meeting in Rome on Tuesday, according to people familiar with their deliberations. The plan to pick him today was previously reported by Bloomberg.

The head of state, Sergio Mattarella, will need to approve the selection before Panetta can take up his role once Visco’s second and final term comes to a close at the end of October.

The choice is potentially the most significant that the rightwing coalition will make this year, the third part of a series of personnel decisions that have allowed Meloni and her colleagues to reshape Italy’s economic leadership in their image.

The selection of 63-year-old Panetta reassigns one of the most dovish officials on the Executive Board to a position on the Governing Council that brings arguably greater prestige as the most senior monetary official in the region’s third-biggest economy.

With Italy’s huge debt exceeding 140% of gross domestic product, the role of governor has frequently become one of crisis fighting, as Visco found himself doing when bond yields surged at the onset of the pandemic in 2020.

The selection of Panetta, who was previously a senior Bank of Italy official, ends weeks of speculation on the succession to one of the most venerated positions in the country. Two prior governors became head of state, while one other — Mario Draghi — went on to lead the ECB before serving as Meloni’s predecessor.

Panetta has long been the front-runner, slated for the job ever since rumors swirled of his possible return from Frankfurt to become finance minister before Giancarlo Giorgetti got that role when the coalition was formed last year.

By picking the Italian official on the Executive Board, that will create an ECB vacancy that Meloni and her coalition will want to keep for themselves in tune with the convention that the country always names one of its six members.

Media speculation in Rome is that a possible successor there would be Bank of Italy official Piero Cipollone, 61, a longtime veteran of the central bank, with brief interruption as Italy’s executive director at the World Bank. A graduate of “La Sapienza” University of Rome, he earned a masters in economics from Stanford and has taught at UC Berkeley.

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